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Is the emphasis on unit labor costs an effective export-promoting policy? A comparison between Greece and Portugal

Author

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  • Dimitris Doulos

    (American College of Greece)

  • Odysseus Katsaitis

    (American College of Greece)

  • George Zombanakis

    (American College of Greece)

Abstract

The aim of this paper is to assess whether internal devaluation is a sufficient measure to improve industrial exports competitiveness. Focusing on the cases of Greece and Portugal, two small open economies, which have recently experienced major corrective policies in the context of Memoranda of Understanding, we aim at explaining the differences observed regarding the growth of industrial exports in the two countries during the period 2000 to date. Our findings point to a number of cost items other than the unit labor cost that have increased the prices of specific categories of goods exports. Over and above that, however, the higher growth of Portuguese manufacturing exports relative to those of Greece may be explained by a variety of structural weaknesses of the Greek economy leading to its inability to retain international market shares and imposing constraints on the domestic industrial base.

Suggested Citation

  • Dimitris Doulos & Odysseus Katsaitis & George Zombanakis, 2020. "Is the emphasis on unit labor costs an effective export-promoting policy? A comparison between Greece and Portugal," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 10(3), pages 393-410, September.
    • Handle: RePEc:spr:eurase:v:10:y:2020:i:3:d:10.1007_s40822-020-00145-2
    DOI: 10.1007/s40822-020-00145-2
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    Cited by:

    1. Amélie Barbier-Gauchard & Meixing Dai & Claire Mainguy & Jamel Saadaoui & Moïse Sidiropoulos & Isabelle Terraz & Jamel Trabelsi, 2020. "Towards a more resilient European Union after the COVID-19 crisis," Working Papers hal-03008144, HAL.
    2. Wim Naudé & Martin Cameron, 2021. "Export-Led Growth after COVID-19: The Case of Portugal," Notas Económicas, Faculty of Economics, University of Coimbra, issue 52, pages 7-53, July.
    3. Amélie Barbier-Gauchard & Meixing Dai & Claire Mainguy & Jamel Saadaoui & Moïse Sidiropoulos & Isabelle Terraz & Jamel Trabelsi, 2021. "Towards a more resilient European Union after the COVID-19 crisis," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 11(2), pages 321-348, June.
    4. Yang Liuyi & Zhu Yunchan & Ren Feirong, 2023. "Does government investment push up manufacturing labor costs? Evidence from China," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-10, December.
    5. Anan Wattanakuljarus, 2021. "Diverse effects of fossil fuel subsidy reform on industrial competitiveness in Thailand," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 11(3), pages 489-517, September.
    6. Olgica Glavaški & Emilija Beker Pucar, 2021. "Heterogeneity of fiscal adjustments in EU economies in the pre- and post-crisis periods: common correlated effects approach," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 11(1), pages 191-226, March.

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    More about this item

    Keywords

    Internal devaluation; Industrial exports; Structural reforms;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements

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